REG-Marsh & McLennan Marsh McLennan Reports Second Quarter 2022 Results
21/07/2022 12:00
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Marsh McLennan Reports Second Quarter 2022 Results
GAAP Revenue Increases 7%; Underlying Revenue Rises 10%
Growth in GAAP Operating Income of 11% and Adjusted Operating Income of 8%
Second Quarter GAAP EPS Rises 19% to $1.91 and Adjusted EPS Increases 8% to
$1.89
Six Months GAAP EPS Rises 14% to $4.01 and Adjusted EPS Increases 12% to $4.19
Marsh McLennan (NYSE: MMC), the world’s leading professional services firm
in the areas of risk, strategy and people, today reported financial results
for the second quarter ended June 30, 2022.
Dan Glaser, President and CEO, said: "Marsh McLennan delivered another strong
quarter. We generated double-digit underlying growth, margin expansion and
solid growth in adjusted EPS with momentum across all of our businesses. Our
performance reflects continued demand for our advice and solutions and the
value we deliver for clients."
Consolidated Results
Consolidated revenue in the second quarter of 2022 was $5.4 billion, an
increase of 7% compared with the second quarter of 2021. On an underlying
basis, revenue increased 10%. Operating income was $1.4 billion, an increase
of 11% from the prior year. Adjusted operating income, which excludes
noteworthy items as presented in the attached supplemental schedules, rose 8%
to $1.3 billion. Net income attributable to the Company was $967 million, or
$1.91 per diluted share, compared with $1.60 in the second quarter of 2021.
Adjusted earnings per share rose 8% to $1.89 per diluted share compared with
$1.75 a year ago and included a headwind of 3 cents per share from foreign
exchange.
For the six months ended June 30, 2022, consolidated revenue was $10.9
billion, an increase of 8% compared to the prior year period. On an underlying
basis, revenue increased 10%. Operating income was $2.8 billion, an increase
of 9% from a year ago. Adjusted operating income, which excludes noteworthy
items as presented in the attached supplemental schedules, rose 10% to $2.9
billion. Net income attributable to the Company was $2.0 billion, or $4.01 per
diluted share, compared with $3.51 in the first six months of 2021. Adjusted
earnings per share rose 12% to $4.19 per diluted share compared with $3.74 for
the first six months of 2021.
Risk & Insurance Services
Risk & Insurance Services revenue was $3.3 billion in the second quarter
of 2022, an increase of 5%, or 9% on an underlying basis. Operating income
rose 2% to $967 million, and adjusted operating income was $1.0 billion, an
increase of 9% versus a year ago. For the first six months ended June 30,
2022, revenue was $6.9 billion, an increase of 8%, or 10% on an underlying
basis. Operating income rose 4% to $2.1 billion, and adjusted operating income
was $2.2 billion, an increase of 11% versus a year ago.
Marsh's revenue in the second quarter was $2.8 billion, an increase of 9% on
an underlying basis. In U.S./Canada, underlying revenue rose 10%.
International operations produced underlying revenue growth of 9%, reflecting
14% growth in Latin America, 11% growth in Asia Pacific, and 7% growth in
EMEA. For the first six months ended June 30, 2022, Marsh's underlying revenue
growth was 10%.
Guy Carpenter's revenue in the second quarter was $522 million, an increase of
9% on an underlying basis. For the first six months ended June 30, 2022, Guy
Carpenter's underlying revenue growth was 10%.
Consulting
Consulting revenue was $2.1 billion in the second quarter of 2022, an increase
of 10% on both a reported and underlying basis. Operating income increased 39%
to $475 million, and adjusted operating income increased 4% to $369 million.
For the first six months ended June 30, 2022, Consulting revenue was $4.1
billion, an increase of 9%, or 10% on an underlying basis. Operating income of
$867 million increased 23% and adjusted operating income increased 6% to $771
million.
Mercer's revenue in the second quarter was $1.4 billion, an increase of 7% on
an underlying basis. Career revenue of $205 million was up 17% on an
underlying basis. Health revenue of $587 million increased 10% on an
underlying basis, and Wealth revenue of $597 million increased 1% on an
underlying basis. For the first six months ended June 30, 2022, Mercer's
revenue was $2.7 billion, an increase of 7% on an underlying basis.
Oliver Wyman’s revenue in the second quarter was $695 million, an increase
of 16% on an underlying basis. For the first six months ended June 30, 2022,
Oliver Wyman’s revenue was $1.4 billion, an increase of 16% on an underlying
basis.
Other Items
The Company repurchased 3.8 million shares of stock for $600 million in the
second quarter. Through six months, the Company has repurchased 7.0 million
shares of stock for $1.1 billion.
Last week, the Board of Directors increased the quarterly dividend 10% to
$0.590 per share, with the third quarter dividend payable on August 15, 2022.
In June, Marsh McLennan Agency (MMA) announced the acquisition of Clark
Insurance, a leading independent insurance agency in Maine. In July, MMA
announced the acquisition of CS Insurance Strategies, Inc., a full-service
insurance agency based in Chicago.
Conference Call
A conference call to discuss second quarter 2022 results will be held today at
8:30 a.m. Eastern time. To participate in the teleconference, please dial +1
866 374 5140. Callers from outside the United States should dial +1 404 400
0571. The access code for both numbers is 24128163. The live audio webcast may
be accessed at marshmclennan.com
(https://cts.businesswire.com/ct/CT?id=smartlink&url=https%3A%2F%2Fwww.marshmclennan.com%2F&esheet=52786947&newsitemid=20220720006022&lan=en-US&anchor=marshmclennan.com&index=1&md5=5f81b69aeb7e54fd44d5284989162f9f)
. A replay of the webcast will be available approximately two hours after the
event.
About Marsh McLennan
Marsh McLennan (NYSE: MMC) is the world’s leading professional services firm
in the areas of risk, strategy and people. The Company’s 83,000 colleagues
advise clients in 130 countries. With annual revenue of approximately $20
billion, Marsh McLennan helps clients navigate an increasingly dynamic and
complex environment through four market-leading businesses. Marsh
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.marsh.com%2F&esheet=52786947&newsitemid=20220720006022&lan=en-US&anchor=Marsh&index=2&md5=b37a6521c1e757c1040c7aab920aa830)
provides data-driven risk advisory services and insurance solutions to
commercial and consumer clients. Guy Carpenter
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.guycarp.com%2F&esheet=52786947&newsitemid=20220720006022&lan=en-US&anchor=Guy+Carpenter&index=3&md5=144da76e208906196c7b743b36cf3982)
develops advanced risk, reinsurance and capital strategies that help clients
grow profitably and pursue emerging opportunities. Mercer
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.mercer.com%2F&esheet=52786947&newsitemid=20220720006022&lan=en-US&anchor=Mercer&index=4&md5=e3c394492581d513474d99ea485f9534)
delivers advice and technology-driven solutions that help organizations
redefine the world of work, reshape retirement and investment outcomes, and
unlock health and well being for a changing workforce. Oliver Wyman
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.oliverwyman.com%2F&esheet=52786947&newsitemid=20220720006022&lan=en-US&anchor=Oliver+Wyman&index=5&md5=337a023679b58c7f0c5333beea6cb776)
serves as a critical strategic, economic and brand advisor to private sector
and governmental clients. For more information, visit marshmclennan.com
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INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements," as defined in the
Private Securities Litigation Reform Act of 1995. These statements, which
express management's current views concerning future events or results, use
words like "anticipate," "assume," "believe," "continue," "estimate,"
"expect," "intend," "plan," "project" and similar terms, and future or
conditional tense verbs like "could," "may," "might," "should," "will" and
"would".
Forward-looking statements are subject to inherent risks and uncertainties
that could cause actual results to differ materially from those expressed or
implied in our forward-looking statements. Factors that could materially
affect our future results include, among other things:
* the impact of geopolitical or macroeconomic conditions on us, our clients and
the countries and industries in which we operate, including from conflicts
such as the war in Ukraine, slower GDP growth or recession, capital markets
volatility and inflation;
* the increasing prevalence of ransomware, supply chain and other forms of cyber
attacks, and their potential to disrupt our operations and result in the
disclosure of confidential client or company information;
* the impact from lawsuits or investigations arising from errors and omissions,
breaches of fiduciary duty or other claims against us in our capacity as a
broker or investment advisor, including claims related to our investment
business’ ability to execute timely trades;
* the financial and operational impact of complying with laws and regulations,
including domestic and international sanctions regimes, anti-corruption laws
such as the U.S. Foreign Corrupt Practices Act, U.K. Anti Bribery Act and
cybersecurity and data privacy regulations;
* our ability to attract, retain and develop industry leading talent;
* our ability to compete effectively and adapt to competitive pressures in each
of our businesses, including from disintermediation as well as technological
change, digital disruption and other types of innovation;
* our ability to manage potential conflicts of interest, including where our
services to a client conflict, or are perceived to conflict, with the
interests of another client or our own interests;
* the impact of changes in tax laws, guidance and interpretations, or
disagreements with tax authorities; and
* the regulatory, contractual and reputational risks that arise based on
insurance placement activities and insurer revenue streams.
The factors identified above are not exhaustive. Marsh McLennan and its
subsidiaries (collectively, the "Company") operate in a dynamic business
environment in which new risks emerge frequently. Accordingly, we caution
readers not to place undue reliance on any forward-looking statements, which
are based only on information currently available to us and speak only as of
the dates on which they are made. The Company undertakes no obligation to
update or revise any forward-looking statement to reflect events or
circumstances arising after the date on which it is made.
Further information concerning Marsh McLennan and its businesses, including
information about factors that could materially affect our results of
operations and financial condition, is contained in the Company's filings with
the Securities and Exchange Commission, including the "Risk Factors" section
and the "Management’s Discussion and Analysis of Financial Condition and
Results of Operations" section of our most recently filed Annual Report on
Form 10-K.
Marsh & McLennan Companies, Inc.
Consolidated Statements of Income
(In millions, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2022 2021 2022 2021
Revenue $ 5,379 $ 5,017 $ 10,928 $ 10,100
Expense:
Compensation and benefits 3,010 2,860 6,110 5,667
Other operating expenses 1,005 929 2,009 1,847
Operating expenses 4,015 3,789 8,119 7,514
Operating income 1,364 1,228 2,809 2,586
Other net benefit credits 59 71 121 142
Interest income 1 1 2 1
Interest expense (114 ) (110 ) (224 ) (228 )
Investment income 2 19 28 30
Income before income taxes 1,312 1,209 2,736 2,531
Income tax expense 334 382 672 706
Net income before non-controlling interests 978 827 2,064 1,825
Less: Net income attributable to non-controlling interests 11 7 26 22
Net income attributable to the Company $ 967 $ 820 $ 2,038 $ 1,803
Net income per share attributable to the Company:
- Basic $ 1.93 $ 1.61 $ 4.06 $ 3.55
- Diluted $ 1.91 $ 1.60 $ 4.01 $ 3.51
Average number of shares outstanding:
- Basic 501 508 502 508
- Diluted 506 513 508 514
Shares outstanding at June 30 499 507 499 507
Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Three Months Ended June 30
(Millions) (Unaudited)
The Company conducts business in 130 countries. As a result, foreign exchange
rate movements may impact period-to-period comparisons of revenue. Similarly,
certain other items such as acquisitions and dispositions, including transfers
among businesses, may impact period-to-period comparisons of revenue.
Underlying revenue measures the change in revenue from one period to the next
by isolating these impacts.
Components of Revenue Change*
Three Months Ended % Currency Acquisitions/ Underlying
June 30,
Change
Impact
Dispositions/
Revenue
GAAP
Other Impact
Revenue
2022 2021
Risk and Insurance Services
Marsh $ 2,778 $ 2,650 5 % (3 ) % (1 ) % 9 %
Guy Carpenter 522 488 7 % (3 ) % 1 % 9 %
Subtotal 3,300 3,138 5 % (3 ) % (1 ) % 9 %
Fiduciary interest income 13 3
Total Risk and Insurance Services 3,313 3,141 5 % (3 ) % (1 ) % 9 %
Consulting
Mercer 1,389 1,274 9 % (5 ) % 7 % 7 %
Oliver Wyman Group 695 618 12 % (4 ) % 1 % 16 %
Total Consulting 2,084 1,892 10 % (5 ) % 5 % 10 %
Corporate Eliminations (18 ) (16 )
Total Revenue $ 5,379 $ 5,017 7 % (4 ) % 1 % 10 %
Revenue Details
The following table provides more detailed revenue information for certain of
the components presented above:
Components of Revenue Change*
Three Months Ended % Currency Acquisitions/ Underlying
June 30,
Change
Impact
Dispositions/
Revenue
GAAP
Other Impact
Revenue
2022 2021
Marsh:
EMEA $ 745 $ 796 (6 ) % (7 ) % (6 ) % 7 %
Asia Pacific 382 347 10 % (7 ) % 6 % 11 %
Latin America 118 103 15 % — 1 % 14 %
Total International 1,245 1,246 — (6 ) % (2 ) % 9 %
U.S./Canada 1,533 1,404 9 % — — 10 %
Total Marsh $ 2,778 $ 2,650 5 % (3 ) % (1 ) % 9 %
Mercer:
Wealth $ 597 $ 625 (5 ) % (6 ) % — 1 %
Health 587 462 27 % (3 ) % 20 % 10 %
Career 205 187 11 % (6 ) % — 17 %
Total Mercer $ 1,389 $ 1,274 9 % (5 ) % 7 % 7 %
* Components of revenue change may not add due to rounding.
Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Six Months Ended June 30
(Millions) (Unaudited)
The Company conducts business in 130 countries. As a result, foreign exchange
rate movements may impact period-to-period comparisons of revenue. Similarly,
certain other items such as acquisitions and dispositions, including transfers
among businesses, may impact period-to-period comparisons of revenue.
Underlying revenue measures the change in revenue from one period to the next
by isolating these impacts.
Components of Revenue Change*
Six Months Ended % Currency Acquisitions/ Underlying
June 30,
Change
Impact
Dispositions/
Revenue
GAAP
Other Impact
Revenue
2022 2021
Risk and Insurance Services
Marsh $ 5,324 $ 4,975 7 % (3 ) % — 10 %
Guy Carpenter 1,521 1,383 10 % (2 ) % 1 % 10 %
Subtotal 6,845 6,358 8 % (2 ) % — 10 %
Fiduciary interest income 17 8
Total Risk and Insurance Services 6,862 6,366 8 % (2 ) % — 10 %
Consulting
Mercer 2,732 2,562 7 % (3 ) % 4 % 7 %
Oliver Wyman Group 1,362 1,203 13 % (3 ) % — 16 %
Total Consulting 4,094 3,765 9 % (3 ) % 2 % 10 %
Corporate Eliminations (28 ) (31 )
Total Revenue $ 10,928 $ 10,100 8 % (3 ) % 1 % 10 %
Revenue Details
The following table provides more detailed revenue information for certain of
the components presented above:
Components of Revenue Change*
Six Months Ended % Currency Acquisitions/ Underlying
June 30,
Change
Impact
Dispositions/
Revenue
GAAP
Other Impact
Revenue
2022 2021
Marsh:
EMEA $ 1,587 $ 1,633 (3 ) % (6 ) % (5 ) % 8 %
Asia Pacific 703 621 13 % (6 ) % 5 % 14 %
Latin America 222 193 15 % (1 ) % — 15 %
Total International 2,512 2,447 3 % (5 ) % (2 ) % 10 %
U.S./Canada 2,812 2,528 11 % — 2 % 10 %
Total Marsh $ 5,324 $ 4,975 7 % (3 ) % — 10 %
Mercer:
Wealth $ 1,214 $ 1,248 (3 ) % (4 ) % — 1 %
Health 1,111 949 17 % (2 ) % 10 % 10 %
Career 407 365 11 % (4 ) % — 16 %
Total Mercer $ 2,732 $ 2,562 7 % (3 ) % 4 % 7 %
* Components of revenue change may not add due to rounding.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended June 30
(Millions) (Unaudited)
Overview
The Company reports its financial results in accordance with accounting
principles generally accepted in the United States (referred to in this
release as in accordance with "GAAP" or "reported" results). The Company also
refers to and presents certain additional non-GAAP financial measures, within
the meaning of Regulation G in accordance with the Securities Exchange Act of
1934. These measures are: adjusted operating income (loss), adjusted operating
margin, adjusted income, net of tax and adjusted earnings per share (EPS). The
Company has included reconciliations of these non-GAAP financial measures to
the most directly comparable financial measure calculated in accordance with
GAAP in the following tables.
The Company believes these non-GAAP financial measures provide useful
supplemental information that enables investors to better compare the
Company’s performance across periods. Management also uses these measures
internally to assess the operating performance of its businesses, to assess
performance for employee compensation, and to decide how to allocate
resources. However, investors should not consider these non-GAAP measures in
isolation from, or as a substitute for, the financial information that the
Company reports in accordance with GAAP. The Company's non-GAAP measures
include adjustments that reflect how management views its businesses, and may
differ from similarly titled non-GAAP measures presented by other companies.
Adjusted Operating Income (Loss) and Adjusted Operating Margin
Adjusted operating income (loss) is calculated by excluding the impact of
certain noteworthy items from the Company's GAAP operating income (loss). The
following tables identify these noteworthy items and reconcile adjusted
operating income (loss) to GAAP operating income (loss), on a consolidated and
reportable segment basis, for the three and six months ended June 30, 2022 and
2021. The following tables also present adjusted operating margin. For the
three and six months ended June 30, 2022 and 2021, adjusted operating margin
is calculated by dividing the sum of adjusted operating income and identified
intangible asset amortization by consolidated or segment adjusted revenue.
Risk & Insurance Consulting Corporate/ Total
Services
Eliminations
Three Months Ended June 30, 2022
Operating income (loss) $ 967 $ 475 $ (78 ) $ 1,364
Operating margin 29.2 % 22.8 % N/A 25.4 %
Add (deduct) impact of noteworthy items:
Restructuring (a) 11 4 13 28
Changes in contingent consideration (b) 12 5 — 17
JLT acquisition-related costs (c) 11 — 3 14
JLT legacy legal charges (d) 11 (1 ) — 10
Disposal of businesses (e) — (112 ) — (112 )
Deconsolidation of the Russian businesses related charges 2 (2 ) — —
Operating income adjustments 47 (106 ) 16 (43 )
Adjusted operating income (loss) $ 1,014 $ 369 $ (62 ) $ 1,321
Total identified intangible amortization expense $ 71 $ 12 $ — $ 83
Adjusted operating margin 32.8 % 19.3 % N/A 26.7 %
Three Months Ended June 30, 2021
Operating income (loss) $ 950 $ 344 $ (66 ) $ 1,228
Operating margin 30.2 % 18.1 % N/A 24.5 %
Add (deduct) impact of noteworthy items:
Restructuring (a) 15 9 7 31
Changes in contingent consideration (b) (5 ) 1 (3 ) (7 )
JLT acquisition-related costs (c) 11 1 — 12
Disposal of businesses (e) (51 ) 1 — (50 )
Other 7 — — 7
Operating income adjustments (23 ) 12 4 (7 )
Adjusted operating income (loss) $ 927 $ 356 $ (62 ) $ 1,221
Total identified intangible amortization expense $ 75 $ 14 $ — $ 89
Adjusted operating margin 32.4 % 19.5 % N/A 26.4 %
(a) Restructuring activities reflect costs related to the Company's global
information technology and HR functions, JLT integration costs, Marsh
operational excellence and adjustments to restructuring liabilities for future
rent under non-cancellable leases.
(b) Primarily includes the change in fair value of contingent consideration
related to acquisitions and dispositions as measured each quarter.
(c) Includes retention costs related to the acquisition of JLT.
(d) Reflects charges and recoveries related to legacy JLT legal matters.
(e) Reflects a gain of $112 million on the sale of the Mercer U.S. affinity
business during the second quarter of 2022. The second quarter of 2021
reflects a gain of $50 million primarily on the sale of the U.K. commercial
networks business. These amounts are included in revenue in the consolidated
statements of income and excluded from underlying revenue and adjusted revenue
in the calculation of adjusted operating margin.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Six Months Ended June 30
(Millions) (Unaudited)
Risk & Insurance Consulting Corporate/ Total
Services
Eliminations
Six Months Ended June 30, 2022
Operating income (loss) $ 2,088 $ 867 $ (146 ) $ 2,809
Operating margin 30.4 % 21.2 % N/A 25.7 %
Add (deduct) impact of noteworthy items:
Restructuring (a) 26 11 21 58
Changes in contingent consideration (b) 22 5 — 27
JLT acquisition-related costs (c) 20 1 3 24
JLT legacy legal charges (d) 14 (11 ) — 3
Disposal of businesses (e) — (112 ) — (112 )
Deconsolidation of Russian businesses and other related charges (f) 42 10 — 52
Legal claims (g) 30 — — 30
Operating income adjustments 154 (96 ) 24 82
Adjusted operating income (loss) $ 2,242 $ 771 $ (122 ) $ 2,891
Total identified intangible amortization expense $ 149 $ 25 $ — $ 174
Adjusted operating margin 34.7 % 19.9 % N/A 28.2 %
Six Months Ended June 30, 2021
Operating income (loss) $ 2,010 $ 705 $ (129 ) $ 2,586
Operating margin 31.6 % 18.7 % N/A 25.6 %
Add (deduct) impact of noteworthy items:
Restructuring (a) 32 20 13 65
Changes in contingent consideration (b) 1 (5 ) (3 ) (7 )
JLT acquisition-related costs (c) 22 2 — 24
Disposal of businesses (e) (53 ) 4 — (49 )
Other 7 — — 7
Operating income adjustments 9 21 10 40
Adjusted operating income (loss) $ 2,019 $ 726 $ (119 ) $ 2,626
Total identified intangible amortization expense $ 161 $ 28 $ — $ 189
Adjusted operating margin 34.5 % 20.0 % N/A 28.0 %
(a) Restructuring activities reflect costs related to the Company's global
information technology and HR functions, JLT integration costs, Marsh
operational excellence and adjustments to restructuring liabilities for future
rent under non-cancellable leases.
(b) Primarily includes the change in fair value of contingent consideration
related to acquisitions and dispositions as measured each quarter.
(c) Includes retention costs related to the acquisition of JLT.
(d) Reflects charges and recoveries related to legacy JLT legal matters.
(e) Reflects a gain of $112 million on the sale of the Mercer U.S. affinity
business during the second quarter of 2022. The second quarter of 2021
reflects a gain of $49 million primarily on the sale of the U.K. commercial
networks business. These amounts are included in revenue in the consolidated
statements of income and excluded from underlying revenue and adjusted revenue
in the calculation of adjusted operating margin.
(f) Loss on deconsolidation of Russian businesses and other related charges. The
loss on deconsolidation of $39 million is included in revenue in the
consolidated statements of income and excluded from underlying revenue and
adjusted revenue used in the calculation of adjusted operating margin.
(g) Settlement charges and legal costs related to strategic recruiting.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three and Six Months Ended June 30
(In millions, except per share data)
(Unaudited)
Adjusted income, net of tax is calculated as the Company's GAAP income from
continuing operations, adjusted to reflect the after tax impact of the
operating income adjustments in the preceding tables and the additional items
listed below. Adjusted EPS is calculated by dividing the Company’s adjusted
income, net of tax, by average number of shares outstanding-diluted for the
relevant period. The following tables reconcile adjusted income, net of tax to
GAAP income from continuing operations and adjusted EPS to GAAP EPS for the
three and six months ended June 30, 2022 and 2021.
Three Months Ended Three Months Ended
June 30, 2022
June 30, 2021
Amount Adjusted EPS Amount Adjusted EPS
Net income before non-controlling interests, as reported $ 978 $ 827
Less: Non-controlling interest, net of tax 11 7
Subtotal $ 967 $ 1.91 $ 820 $ 1.60
Operating income adjustments $ (43 ) $ (7 )
Investments adjustment (a) 1 (1 )
Pension settlement adjustment (b) 1 —
Income tax effect of adjustments (c) 33 (12 )
Impact of U.K. tax rate change (d) — 100
(8 ) (0.02 ) 80 0.15
Adjusted income, net of tax $ 959 $ 1.89 $ 900 $ 1.75
Six Months Ended Six Months Ended
June 30, 2022 June 30, 2021
Amount Adjusted EPS Amount Adjusted EPS
Net income before non-controlling interests, as reported $ 2,064 $ 1,825
Less: Non-controlling interest, net of tax 26 22
Subtotal $ 2,038 $ 4.01 $ 1,803 $ 3.51
Operating income adjustments $ 82 $ 40
Investments adjustment (a) (8 ) (1 )
Pension settlement adjustment (b) 1 —
Income tax effect of adjustments (c) 15 (21 )
Impact of U.K. tax rate change (d) — 100
90 0.18 118 0.23
Adjusted income, net of tax $ 2,128 $ 4.19 $ 1,921 $ 3.74
(a) Represents mark-to-market losses and gains, primarily related to the
Company’s investment in Alexander Forbes ("AF").
(b) Charges resulting from lump sum pension settlements elected by participants.
(c) For items with an income tax impact, the tax effect was calculated using an
effective tax rate based on the tax jurisdiction for each item.
(d) Reflects the re-measurement of the Company's U.K. deferred tax assets and
liabilities upon enactment of legislation that increased the corporate income
tax rate applicable to U.K. based entities from 19% to 25%, effective April 1,
2023.
Marsh & McLennan Companies, Inc.
Supplemental Information
Three and Six Months Ended June 30
(Millions) (Unaudited)
Three Months Ended Six Months Ended
June 30,
June 30,
2022 2021 2022 2021
Consolidated
Compensation and benefits $ 3,010 $ 2,860 $ 6,110 $ 5,667
Other operating expenses 1,005 929 2,009 1,847
Total expenses $ 4,015 $ 3,789 $ 8,119 $ 7,514
Depreciation and amortization expense $ 85 $ 104 $ 174 $ 201
Identified intangible amortization expense 83 89 174 189
Total $ 168 $ 193 $ 348 $ 390
Stock option expense $ 7 $ 4 $ 12 $ 25
Risk and Insurance Services
Compensation and benefits $ 1,750 $ 1,632 $ 3,551 $ 3,242
Other operating expenses 596 559 1,223 1,114
Total expenses $ 2,346 $ 2,191 $ 4,774 $ 4,356
Depreciation and amortization expense $ 40 $ 58 $ 83 $ 108
Identified intangible amortization expense 71 75 149 161
Total $ 111 $ 133 $ 232 $ 269
Consulting
Compensation and benefits $ 1,145 $ 1,110 $ 2,309 $ 2,184
Other operating expenses 464 438 918 876
Total expenses $ 1,609 $ 1,548 $ 3,227 $ 3,060
Depreciation and amortization expense $ 27 $ 29 $ 53 $ 58
Identified intangible amortization expense 12 14 25 28
Total $ 39 $ 43 $ 78 $ 86
Marsh & McLennan Companies, Inc.
Consolidated Balance Sheets
(Millions)
(Unaudited) December 31,
June 30,
2021
2022
ASSETS
Current assets:
Cash and cash equivalents $ 909 $ 1,752
Net receivables 6,286 5,586
Other current assets 974 926
Total current assets 8,169 8,264
Goodwill and intangible assets 18,501 19,127
Fixed assets, net 863 847
Pension related assets 2,160 2,270
Right of use assets 1,744 1,868
Deferred tax assets 537 551
Other assets 1,466 1,461
TOTAL ASSETS $ 33,440 $ 34,388
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt $ 1,311 $ 17
Accounts payable and accrued liabilities 3,029 3,165
Accrued compensation and employee benefits 1,914 2,942
Current lease liabilities 314 332
Accrued income taxes 448 198
Total current liabilities 7,016 6,654
Fiduciary liabilities 10,530 9,622
Less - cash and cash equivalents held in a fiduciary capacity (10,530 ) (9,622 )
— —
Long-term debt 10,487 10,933
Pension, post-retirement and post-employment benefits 1,407 1,632
Long-term lease liabilities 1,752 1,880
Liabilities for errors and omissions 340 355
Other liabilities 1,521 1,712
Total equity 10,917 11,222
TOTAL LIABILITIES AND EQUITY $ 33,440 $ 34,388
Marsh & McLennan Companies, Inc.
Consolidated Statements of Cash Flows
(Millions) (Unaudited)
Six Months Ended
June 30,
2022 2021
Operating cash flows:
Net income before non-controlling interests $ 2,064 $ 1,825
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization 348 390
Non-cash lease expense 152 158
Deconsolidation of Russian businesses 39 —
Share-based compensation expense 194 176
Net (gain) loss on investments, disposition of assets and other (130 ) (66 )
Changes in assets and liabilities:
Accrued compensation and employee benefits (992 ) (630 )
Provision for taxes, net of payments and refunds 235 297
Net receivables (978 ) (626 )
Other changes to assets and liabilities 40 (415 )
Contributions to pension and other benefit plans in excess of current year (226 ) (187 )
credit
Operating lease liabilities (166 ) (172 )
Net cash provided by operations 580 750
Financing cash flows:
Purchase of treasury shares (1,100 ) (434 )
Net proceeds from issuance of commercial paper 944 —
Repayments of debt (8 ) (509 )
Net issuance of common stock from treasury shares (115 ) (23 )
Net distributions of non-controlling interests and deferred/contingent (104 ) (47 )
consideration
Dividends paid (547 ) (478 )
Increase in fiduciary liabilities 1,428 1,277
Net cash provided by (used for) financing activities 498 (214 )
Investing cash flows:
Capital expenditures (239 ) (151 )
Net purchase of long-term investments and other (3 ) (4 )
Dispositions 135 81
Acquisitions, net of cash and cash held in a fiduciary capacity acquired (151 ) (350 )
Net cash used for investing activities (258 ) (424 )
Effect of exchange rate changes on cash, cash equivalents, and cash and cash (755 ) 38
equivalents held in a fiduciary capacity
Increase in cash, cash equivalents, and cash and cash equivalents held in a 65 150
fiduciary capacity
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary 11,374 10,674
capacity at beginning of period
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary $ 11,439 $ 10,824
capacity at end of period
Reconciliation of cash, cash equivalents, and cash and cash equivalents held
in a fiduciary capacity to the Consolidated Balance Sheets
Six Months Ended June 30, 2022 2021
(In millions)
Cash and cash equivalents $ 909 $ 888
Cash and cash equivalents held in a fiduciary capacity 10,530 9,936
Total cash, cash equivalents, and cash and cash equivalents held in a $ 11,439 $ 10,824
fiduciary capacity
Media:
Erick R. Gustafson
Marsh McLennan
+1 202 263 7788
erick.gustafson@mmc.com (mailto:erick.gustafson@mmc.com)
Investor:
Sarah DeWitt
Marsh McLennan
+1 212 345 6750
sarah.dewitt@mmc.com (mailto:sarah.dewitt@mmc.com)
View source version on businesswire.com:
https://www.businesswire.com/news/home/20220720006022/en/
(https://www.businesswire.com/news/home/20220720006022/en/)
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